2023 (2) TMI 214 - AAR - Customs

Classification of imported goods - products used in the preparation of animal feed supplements - to be classified under Heading 2309 or under Heading 2936? - HELD THAT - As per the Rule 1 of the General Rules of Interpretation the classification of goods shall be determined according to the terms of the headings and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of Rule 1 and if the headings and legal notes do not otherwise require Rules 2 through 6 may be applied in order. While Chapter 29 talks about separate chemically defined compounds the explanatory notes to HSN provides for products which remain classified in Chapter 29 even when they are not separate chemically defined compounds. There are certain exceptions to the rule that Chapter 29 is limited to separate chemically defined compounds. These exceptions include provitamins and vitamins (including concentrates and intermixtures) whether or not in a solvent - Chapter Heading 2309 is in the nature of a residuary heading as Chapter Note I to Chapter 23 says that the Heading 2309 includes products of a kind not elsewhere specified or included whereas chapter sub-heading 2936 is a specific heading for vitamins and provitamins. As per the Rule 3(a) of General Interpretation Rules the specific heading shall prevail over the general heading. The Hon ble High Court of Allahabad in the case of COMMISSIONER OF CUSTOMS CGO. VERSUS SONAM INTERNATIONAL SHOP NO. 9 2010 (10) TMI 120 - ALLAHABAD HIGH COURT held that vitamins of high concentration used for manufacture of animal feed will be classified under 2936. Admittedly all the products in this case has high concentration of vitamins ranging from 40% to 98%. Even though the applicant in their application has stated that these products which they are importing are going to be used in the manufacture of animal feed as discussed in the preceding paragraphs vitamin products intended for use in animal feed preparations are not excluded from the ambit of the Chapter 29. Therefore when confronted with a specific classification entry vis-a-vis a residuary classification entry one must favour the specific entry. In fact that the mandate of Rule 3A of the General Rules of Interpretation of Customs Tariff. The products in this case viz. LUTA.CALPA N 98% LUTA.E 50 LUTA. 0A/D3 1000/200 PLUS LUTAVIT A 1000 PLUS CHOLINC.LSG would merit classification under Heading 2936 of the First Schedule to the Customs Tariff Act 1975.

Summary

Issues Involved:
1. Classification of imported vitamin premixes for animal feed under the appropriate tariff heading.
2. Interpretation of relevant rules and explanatory notes for classification.
3. Consideration of specific vs. general tariff headings.
4. Analysis of precedents and relevant case laws.

Detailed Analysis:

1. Classification of Imported Vitamin Premixes:
The applicant, a leading chemical industry company, imports vitamin premixes used in animal feed supplements from its parent company in Germany and other third parties. The applicant seeks clarification on whether these products should be classified under Heading 2309 (animal feed preparations) or Heading 2936 (vitamins and provitamins).

2. Interpretation of Relevant Rules and Explanatory Notes:
The classification of goods is governed by Rule 1 of the General Rules of Interpretation, which states that classification should be determined according to the terms of the headings and any relative section or chapter notes. If the goods cannot be classified solely on this basis, Rules 2 through 6 may be applied.

The applicant argues for classification under Heading 2309, which includes preparations for use in making complete or supplementary feeds. The explanatory notes to Heading 2309 describe these preparations as compound compositions known as "premixes" that consist of various substances like vitamins, amino acids, and antibiotics, designed to improve digestion, safeguard animal health, and preserve feeding stuffs. These preparations may contain vitamins but must be mixed with an animal-grade carrier to ensure homogeneity.

3. Consideration of Specific vs. General Tariff Headings:
The HSN explanatory notes to Chapter Heading 2936 state that vitamins and provitamins, whether natural or synthesized, and their derivatives used primarily as vitamins, are included under this heading. These products may be diluted in solvents or stabilized for preservation or transport, provided the additives do not alter their character or render them suitable for specific use rather than general use.

Chapter Heading 2309 is considered a residuary heading, covering products not specified elsewhere. In contrast, Chapter Heading 2936 specifically covers vitamins and provitamins. According to Rule 3(a) of the General Rules of Interpretation, a specific heading takes precedence over a general heading. The Supreme Court in Dunlop India Ltd. v. Union of India emphasized that an article with a reasonable claim to a specific classification should not be consigned to a residuary heading.

4. Analysis of Precedents and Relevant Case Laws:
The applicant cites the order of the Larger Bench of the Tribunal in Tetragon Chemie, which was upheld by the Supreme Court. However, the products in the present case differ as they are high-concentration vitamins used in animal feed, unlike the premixes in Tetragon Chemie. The Supreme Court in CCE, Calcutta v. Alnoori Tobacco Products highlighted that each case depends on its facts, and a single significant detail can alter the conclusion.

The High Court of Allahabad in Sonam International held that vitamins of high concentration used in animal feed manufacturing should be classified under Heading 2936. The products in this case have high vitamin concentrations ranging from 40% to 98%.

Despite the applicant's assertion that these products are used in animal feed manufacturing, vitamin products intended for such use are not excluded from Chapter 29. Therefore, the specific classification entry for vitamins under Heading 2936 should be favored over the general entry under Heading 2309, as mandated by Rule 3A of the General Rules of Interpretation.

Ruling:
Based on the above findings, the products in question—LUTA.CALPA N 98%, LUTA.E 50, LUTA.0A/D3 1000/200 PLUS, LUTAVIT A 1000 PLUS, and CHOLINC.LSG—merit classification under Heading 2936 of the First Schedule to the Customs Tariff Act, 1975.